subsidies

Tag Archives for subsidies.

The Government Can Now Order American Airlines To Continue Flying To Small Cities

by Gary Leff on September 25, 2020

Sep 25 2020

American Airlines has been threatening to leave small cities if Congress doesn’t extend another $25 billion in payroll support. However one of the provisions of the CARES Act says an airline taking subsidized loans – which American just did – can be ordered by the Secretary of Transportation to continue service to small towns, as well as anywhere that it’s necessary for pharmaceutical supply chains.

No further legislation or subsidy is required to insist on continued air service. Any city losing American Airlines air service now only does so because the federal government has decided to permit it.

American Airlines Just Mortgaged The AAdvantage Frequent Flyer Program For $5.5 Billion

by Gary Leff on September 25, 2020

Sep 25 2020

American Airlines mortgaged their AAdvantage program with the federal government, using it as collateral for a subsidized $5.5 billion loan. The government will get warrants to purchase stock in the airline – and the assets of the frequent flyer program itself if the airline defaults.

Court Blocks Government Aid To Bankrupt Avianca

by Gary Leff on September 13, 2020

Sep 13 2020

While the government announced the backing of a $370 million loan to the airline as part of its bankruptcy restructuring, a Colombian court has now blocked the government aid. This matters to Americans invested in the LifeMiles frequent flyer program, which provides access to cheap purchase of miles and reasonably priced awards on Star Alliance airlines.

American Airlines Appears To Trade Air Service For Political Support In Oklahoma

by Gary Leff on September 12, 2020

Sep 12 2020

American Airlines announced they were going to stop serving 15 cities once government payroll subsidies ran out, and they were no longer required to fly to all of their pre-existing markets.

They’ve backtracked on several of those changes. The latest is Stillwater, Oklahoma where the airport put out a press release basically announcing that their Senators traded political support for air service.

The Case For A Second Airline Bailout

by Gary Leff on September 2, 2020

Sep 02 2020

While I’ve been vocally against airline bailouts, one of my main frustration is that proponents have couched their support in terms of ‘the workers’ even though much of the money goes to the airlines themselves and protects investors and creditors. There’s been very little honest attempt to make the true case for payroll support grants.

So let me at least lay out what seems to be the strongest argument against my own position. It comes down to a bet that we’ll be past the virus in April 2021, that airlines won’t invest enough in their businesses to be ready to grow in the meantime, and that the country benefits most from having airline capacity.

American Airlines Expects All Furloughed Workers Back Next Year, To Fly More Before Passengers Return

by Gary Leff on August 31, 2020

Aug 31 2020

Speaking to a group of pilots at the end of last week, a recording of which was reviewed by View From The Wing, American Airlines CEO Doug Parker laid out plans not to cut flights further during the winter this year and to grow the schedule for next year even in advance of passenger demand.

With all of the employees that have taken early retirement, that should mean recalling everyone that’s being furloughed.

American Airlines CEO Doug Parker Spends ‘All Of His Time’ On Government Subsidies

by Gary Leff on August 30, 2020

Aug 30 2020

In a meaningful sense U.S. airlines are no longer private businesses, they’re vassals of the state. And that’s not surprising. While the largest carriers have given only a small potential ownership stake to the U.S. government in the form of warrants in exchange for subsidies this year, they’ve been effectively converted from commercial enterprises working to satisfy customers into political creatures working to satisfy “the powers that be,” as American Airlines CEO Doug Parker calls them.

Speaking to a group of American Airlines pilots at the end of last week, a recording of which was reviewed by View From The Wing, Parker said lobbying in DC is “frankly where I’ve been spending all of my time.”

American Airlines Backs Off Illegal Plan To Stop Serving Joplin, Missouri And Sioux City, Iowa

by Gary Leff on August 29, 2020

Aug 29 2020

On August 20th American Airlines announced plans to drop air service to 15 cities unless the government forked over another $6 billion in subsidies. The cities were spread across 14 states (28 Senators!) and many of the airports slated to lose service October 7 are represented by members of the House Transportation Committee.

However the plan was too clever by half. No one at American Airlines realized the problems dropping service to 3 of the cities on the list, and just as I’ve predicted they are now backtracking.

American’s Plan To Drop Service To Sioux City, Iowa And Joplin, Missouri Is Illegal

by Gary Leff on August 20, 2020

Aug 20 2020

American Airlines announced this morning that unless the government gives them another round of CARES Act payroll support, they will drop service to 15 cities October 7.

Except they cannot legally leave two of the cities without giving advance advance notice to the Department of Transportation, which they have not done.

The Only Honest Case For Another Round Of Airline Bailouts Comes From Ben Baldanza

by Gary Leff on August 18, 2020

Aug 18 2020

Former Spirit Airlines CEO is a JetBlue board member and naturally thinks more of that sweet, sweet taxpayer cash ought to flow to airlines. He lays out what he calls misconceptions about government aid to airlines as he makes the case for the second government bailout of the industry this year.

Baldanza’s piece is a breath of fresh air though because it honestly talks about government subsidies as more than just an unemployment program. He takes seriously government support as an airline bailout, ensuring airlines are providing capacity to the economy, and doesn’t offer the fiction that it’s only about supporting the workers.

Now we have serious arguments worth answering.